Janet Henry from HSBC said Sweden's measures are clearly a “beggar-thy neighbour” manoeuvre to weaken the krone.
Photo: CORBIS
[From article]
Sweden has cut interest rates below zero and launched quantitative easing to fight deflation, becoming the latest Scandinavian state to join Europe’s escalating currency wars.
The Riksbank caught markets by surprise, reducing the benchmark lending rate to minus 0.10pc and unveiled its first asset purchases, vowing to take further action at any time to stop the country falling into a deflationary trap. The bank presented the move as precautionary step due to rising risks of a “poorer outcome abroad” and the crisis in Greece.
Janet Henry from HSBC said the measures are clearly a “beggar-thy neighbour” manoeuvre to weaken the krone, the latest such action in a global currency war that does little to tackle the deeper problem of deficient world demand.
The move comes as neighbouring Denmark takes ever more drastic steps to stop a flood of money overwhelming its exchange rate peg to the euro and tightening the deflationary noose.
[. . .]
The Chinese yuan is linked to the US dollar through a “dirty float”. Yet the dollar is rising relentlessly against other Asian currencies as the prospect of monetary tightening by the Federal Reserve lures a flood of capital into the US, a replay of the strains that led to the East Asia crisis in 1998.
[. . .]
Manoj Pradhan, Morgan Stanley’s global economist, said the world is revisiting the “ghosts of the 1930s” as one country after another tries to steal a march on others by getting in devaluation first. “The lesson from the 1930s is that those who do so early benefit at the expense of those who wait too long,” he said.
Mr Pradhan said it is becoming harder to extract advantage from this ploy now that “everyone is doing it”. China faces strong pressure to defend itself while it still can. “The longer they wait, the harder it will be for China’s policy-makers,” he said.
http://www.telegraph.co.uk/finance/economics/11408950/Sweden-cuts-rates-below-zero-as-global-currency-wars-spread.html
Sweden cuts rates below zero as global currency wars spread
Morgan Stanley warns that the world is revisiting the “ghosts of the 1930s” as one country after another tries to steal a march on others by devaluing first
By Ambrose Evans-Pritchard
4:58PM GMT 12 Feb 2015
[From article]
Sweden has cut interest rates below zero and launched quantitative easing to fight deflation, becoming the latest Scandinavian state to join Europe’s escalating currency wars.
The Riksbank caught markets by surprise, reducing the benchmark lending rate to minus 0.10pc and unveiled its first asset purchases, vowing to take further action at any time to stop the country falling into a deflationary trap. The bank presented the move as precautionary step due to rising risks of a “poorer outcome abroad” and the crisis in Greece.
Janet Henry from HSBC said the measures are clearly a “beggar-thy neighbour” manoeuvre to weaken the krone, the latest such action in a global currency war that does little to tackle the deeper problem of deficient world demand.
The move comes as neighbouring Denmark takes ever more drastic steps to stop a flood of money overwhelming its exchange rate peg to the euro and tightening the deflationary noose.
[. . .]
The Chinese yuan is linked to the US dollar through a “dirty float”. Yet the dollar is rising relentlessly against other Asian currencies as the prospect of monetary tightening by the Federal Reserve lures a flood of capital into the US, a replay of the strains that led to the East Asia crisis in 1998.
[. . .]
Manoj Pradhan, Morgan Stanley’s global economist, said the world is revisiting the “ghosts of the 1930s” as one country after another tries to steal a march on others by getting in devaluation first. “The lesson from the 1930s is that those who do so early benefit at the expense of those who wait too long,” he said.
Mr Pradhan said it is becoming harder to extract advantage from this ploy now that “everyone is doing it”. China faces strong pressure to defend itself while it still can. “The longer they wait, the harder it will be for China’s policy-makers,” he said.
http://www.telegraph.co.uk/finance/economics/11408950/Sweden-cuts-rates-below-zero-as-global-currency-wars-spread.html
Sweden cuts rates below zero as global currency wars spread
Morgan Stanley warns that the world is revisiting the “ghosts of the 1930s” as one country after another tries to steal a march on others by devaluing first
By Ambrose Evans-Pritchard
4:58PM GMT 12 Feb 2015
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